Harvey appraisal well receives funding

Independent Oil and Gas plc (IOG), the development and production focused Oil and Gas Company, is pleased to announce the proposed funding of its 100% owned and operated high-impact Harvey appraisal well and updates on preparations for spudding the well in 4Q18.

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Non-binding term sheet for a new non-convertible loan facility (Harvey Facility) signed with London Oil and Gas Limited (LOG) of £15 million, principally to fund the upcoming Harvey appraisal well.

Proceeds of the Harvey Facility to also fund other costs in the run-up to IOG’s gas development project sanction, including full repayment of final remaining Skipper liabilities.

Loan will carry an interest rate of LIBOR+9% per annum.

The company would also issue 20 000 000 warrants exercisable at 32.18p, a 10% premium to the closing price of IOG shares on 16 August 2018.

Advanced preparation work is ongoing on the Harvey appraisal well, targeting spudding in December 2018.

The well aims to prove gas across the entire Harvey structure. The November 2017 Harvey CPR estimates low/mid/high resources of 45/114/286 billion ft3 with a 50% geological chance of success.

Harvey area 3D-seismic reprocessing is complete, already fulfilling the 30th Licensing Round commitment. Seismic reinterpretation and remapping is expected to conclude in August 2018.

Well management, rig and services discussions are very well advanced, with contracts to be agreed in coming weeks, further details of which will be announced once signed.

The Harvey appraisal well lies in close proximity to IOG’s 100% owned Thames pipeline and on success any gas produced would be exported via the pipeline.

Andrew Hockey, CEO of IOG commented:

“A successful Harvey appraisal well could nearly double the proven reserves in our Southern North Sea gas portfolio in the high case of 286 billion ft3, which the Board of IOG considers to be a reasonably likely outcome. The 114 billion ft3 mid-case result would still make it our largest gas asset, significantly enhancing the company’s value. This would enable a fast-track Harvey development to follow in direct continuation from Phase 1 of the development of our proven gas assets at the Blythe Hub and Vulcan Satellites Hub, which is approaching Final Investment Decision (FID). A Harvey development would benefit from very strong synergies with our imminent development project, which would also ensure a healthy economic value for Harvey even in the 44 billion ft3 low case appraisal result. The re-interpretation of the reprocessed 3D seismic to Pre-Stack Depth Migration (PSDM), to be completed very shortly, will further de-risk the appraisal well.

Being fully funded for the Harvey appraisal well, with its excellent risk-return profile, provides a very exciting catalyst for the company to come soon after FID on the development assets. Investors will now enjoy significant near-term upside on top of the high-value development project, without being required to fund it. I look forward to providing further updates on the well preparations in due course.”